Debt Negotiation is the worlds oldest profession. It does not require a lawyer or an attorney, but having one to negotiate for you can dramatically improve the results.
In contemporary economic usage, the cancellation of debt is referred to as “debt forgiveness.” This terminology resonates with New Testament passages in which debt is used as a metaphor. In the Lord’s Prayer, for example, the disciples are taught to ask God to “forgive us our debts, as we also have forgiven our debtors”
The area of negotiation is particularly adapted to the legal profession where attorneys can evaluate not only personal hardship and other equities but the body of laws that have grown around the issues of debt contracts and debt collection and use these laws as leverage in the negotiation process to achieve the best result
The basics of negotiation
- Don't issue an ultimatum
- Any kind of an ultimatum such as "take it or leave it", this is "my final offer" cuts off further negotiation
- Use available leverage
- We know the laws that surround debt contracts and debt collection. Applying these laws to the negotiation process
in a correct and even handed way. By showing creditors nicely how they may have overreached produces results favorable to the client. Some of the many laws to consider in negotiating debt are, The Federal Fair Debt Collection Practices Act, The California Fair Debt Collection Practices Ace
, The Federal Truth in Lending Act, HAMP, The California Health and Safety Code, California Assembly Bill 774, California Statue of Limitations on Debt Collection, The Federal Bankruptcy Act,
Petitions for Emergency Injunctive Relief and Stay of Foreclosure
- Demonstrate your clients hardship
- In most cases a client is seeking a reduction in his debt due to a real financial hardship. Documenting this
hardship with an income and expense statement is an important aspect of debt negotiation
- Listen and Restate Comments
- Paraphrase others' statements in your own words. This lets them provide clarification or correct misinterpretations. In addition, you will often hear an elaboration on a point that will help you find out their needs and how to meet them
- Stay Cool and depersonalize disagreements
- Never negotiate when you are angry. Be aware of your own hot buttons, and do not rise to the bait if someone pushes one of them. Similarly, help the other party stay cool. When identifying potentially touchy points, refer to them objectively rather than assigning ownership.
- Beware of a Stall: Reach closure
- If the other party seems uninterested in finalizing the agreement, he or she might think a delay will improve the bargaining position. Ask what additional information is needed for a final decision to be made. On the other hand, you can use a stalling technique yourself. If you want to negotiate more slowly and deliberately, tell the other party that you wish to confer.
- Compare Settlement with Bankruptcy
- The threat of bankruptcy is always looming in a debt contract. Rationalizing the outcome of an agreed upon settlement as compated to a forced resolution in bankruptcy can produce a fast settlement.